When two or more people are buying property in the personal names, they must decide whether to hold the property as joint tenants or tenants in common.
In this article, we will explore what the two terms mean.
Joint Tenancy
Joint tenants hold property in equal shares – they have an undivided interest in the property. Joint tenancy creates the right of survivorship. This means that upon the death of one of the joint tenants, the interest of the deceased joint tenant automatically passes to the surviving joint tenant (the property does not become part of your estate when you die, so you can’t make that property part of your will).
Married couples often hold property as joint tenants. Joint tenancy is most suited to those that are sure that they want their interest in the property to pass automatically to the other joint tenant upon death.
Tenants in Common
If you own property as tenants in common, you own a specified share in the property, for example a 25% or 50% share in the property. Each tenant in common has the right to deal with their share of the property as they wish. This means a tenant in common can leave their share of the property in a will.
Can the type of tenancy be changed in future?
It is possible to change the type of tenancy if the need arises. The most common form of change in tenancy is from a joint tenancy to tenants in common. However, any change in tenancy will be subject to legal fees and registration costs.
Other Considerations?
Although it is possible to change the type of tenancy, it is important to carefully consider the type of joint ownership before making a brash decision. You may wish to turn your mind to the following additional considerations:
- Planning for possible family law proceedings – the court’s decision may not reflect the actual financial contribution by each joint tenant.
- Asset protection – seek legal and financial advice where one party is exposed to greater financial risk or the threat of bankruptcy.
- Estate planning – joint tenants cannot leave property held in joint tenancy in a will. This may be important for blended families.
If you have any questions about this article or wish to discuss its contents, please call 1300 080 569 or email [email protected]
Irfan Ebrahim
27/01/2022
DISCLAIMER: This article is provided for general information purposes only. Its content is current at the date of preparation. Changes in circumstances or policy or legislation after the time of preparation may impact the accuracy of the information provided. It is not legal advice and is not tailored to meet your individual needs. You should obtain specialist advice from a qualified professional based on your specific circumstances before taking any action concerning the matters discussed in this guide. One80 Conveyancing Pty Ltd will not accept liability for any reliance on this article, including but not limited to, the accuracy, currency or completeness of any information or links.
